CMS must account for inclusion of COVID years in 2023 ACO REACH benchmarks to avoid unfairly penalizing REACH ACOs.
This was originally published by the National Association of ACOs (NAACOs).
Highlights:
Comprised of 132 accountable care organizations (ACOs) and caring for 2.1 million beneficiaries, the ACO REACH Model tests new policies around health equity incentives and primary care capitation, among other things. But preliminary analysis from NAACOS member Physicians of Southwest Washington (PSW) and MultiCare Connected Care in Olympia, Washington, calls attention to a looming issue in the model—including that years impacted by the COVID-19 pandemic will create regional variation that could impede ACOs’ success.
Specifically, CMS will factor years affected by the COVID-19 pandemic into REACH ACOs’ financial benchmarks, creating unfair performance standards for ACOs because of data anomalies. The pandemic caused preventive, routine care to be missed in 2020 and delayed elective surgeries, and not all of that care was made up for in 2021. Furthermore, there were dramatic variations in spending across the country due to some regions more quickly lifting stay-at-home orders and deferring elective procedures.
How are ACO REACH benchmarks determined?
The model’s “rate book”, which spells out Medicare fee-for-service spending in each county in the country, is modified from what’s used in Medicare Advantage. CMS uses the rate book to adjust REACH ACOs’ benchmarks for regional spending. The REACH rate book is based on 3 years’ worth of data (2019-2021) and will include 2 pandemic-stricken years for Performance Year 2023. Last year, the rate book was based off Medicare spending between 2017 and 2019 and didn’t have this problem. Conversely, the Medicare Advantage rate book is 5 years (2016-2020), so 2023 only includes one year of pandemic data and the impact of COVID-19 will be mitigated in later years when averaging across 5 years instead of 3 years.
REACH’s benchmarks in 2023 are made up of 60% of the historical spending of the ACO’s assigned patients and 40% regional expenditures, defined by counties from which the ACO draws patients and determined by the rate book
What is happening?
In short, there is large variation in regional trends between the 2022 rate book and the 2023 rate book due the inclusion of 2020 and 2021. For example, an average-risk beneficiary in Maine would receive a 1% reduction in its regional rate using the 2023 rate book compared with the 2022 rate book. Contrast this with an average-risk beneficiary in Washington, D.C., that would receive an 11% increase in its regional rate in 2023 compared with 2022. Puerto Rico (–2%) and Maine (–1%) would see the smallest year-over-year change, while D.C. (11%), New York (7%), and California (6%) would see the largest increases.
In the case of Maine, a –1% regional trend for 2023 is most useful when you compare it to the national average for the same time period, which was +4%. This means an average beneficiary in Maine became 5% less expensive relative to an average beneficiary in the United States from 2022 to 2023 and the ACO faces a 5% headwind using the 2023 rate book. This is problematic when you consider that regional health care expenditures in 2020 and 2021 were likely influenced by state and local COVID-19 restrictions and cultural norms instead of by structural changes in the way care is delivered in these markets.
What are the implications?
The current REACH rate book will create arbitrary winners and losers based on vast regional variation in Medicare spending that was exacerbated by the pandemic. Some ACOs will see lower benchmarks in 2023 because of CMS’s including pandemic-stricken years. Let’s say, the Maine ACO sees a 2% decrease in its benchmark. This could make participation untenable when considering CMS keeps the first 3% of savings for itself. The Maine ACO would have to generate 5% in savings to collect any reward for its participation. ACOs in the model collectively generated 3.3% in savings in 2021, the only year for which data are available.
Additionally, decreased savings reduces the opportunity for ACOs to reinvest earned shared savings back into patient care through care coordinators, quality improvement efforts, enhanced health information technology, home visits, and other programs that help provider better care at lower costs.
Policy Considerations
CMS should consider approaches to mitigate the potential negative impacts, such as:
CMS' 340B Repayment Proposal May Harm Vulnerable Hospitals, Reward Those With Higher Revenues
April 26th 2024The 340B hospitals not receiving an offsetting lump-sum payment from CMS following 2018-2022 cuts later ruled unlawful are disproportionately rural, publicly owned, and nonacademic, according to a new study.
Read More
Examining Low-Value Cancer Care Trends Amidst the COVID-19 Pandemic
April 25th 2024On this episode of Managed Care Cast, we're talking with the authors of a study published in the April 2024 issue of The American Journal of Managed Care® about their findings on the rates of low-value cancer care services throughout the COVID-19 pandemic.
Listen
Empowering Community Health Through Wellness and Faith
April 23rd 2024To help celebrate and recognize National Minority Health Month, we are bringing you a special month-long podcast series with our Strategic Alliance Partner, UPMC Health Plan. In the third episode, Camille Clarke-Smith, EdD, MS, CHES, CPT, discusses approaching community health holistically through spiritual and community engagement.
Listen
Beyond Insulin: The Impact of Next-Generation Diabetes Technology
April 17th 2024Experts explain how new diabetes technologies like continuous glucose monitors are transforming care beyond intensive insulin therapy, offering personalized insights and improving outcomes for patients of all treatment levels.
Read More